"In the worst case scenario, if income were reduced by 20 percent [because of the pandemic], what would it be like?" There will be 420 million new people living in poverty worldwide, which is a huge amount. At the "2020 Dialogue with the World • International Poverty Reduction Forum" hosted by Phoenix TV and Phoenix.com, Chen Shaohua, former chief statistician of the Development Research Bureau of the World Bank and chair professor of the Department of Economics at the Zou Zhizhuang Center for Economic Research of Xiamen University and the School of Economics, mentioned that the epidemic has had a huge impact on global per capita income and poverty. In her view, how to make good use of new technologies such as big data and artificial intelligence is the key to ensuring and improving the effect of poverty reduction.
The following is a transcript of the speech:
Hello everyone, first of all, I would like to thank Phoenix.com and Phoenix Satellite TV for hosting this conference, and thank you for the invitation of Phoenix.com. Because I am in the United States, I cannot attend the conference in person, and I wish the conference success.
2020 is a key year for us to complete the eradication of absolute poverty in China under the current standards. According to the World Bank's international absolute poverty line of $1.90 a day, China would have been lifted out of poverty long ago. China's current poverty standard, if the purchasing power of the 2011 International Comparison Project parity is 2.29, is nearly $2.30 a day, which is higher than the World Bank's poverty line.
We know that in the global Sustainable Development Goals, the goal of poverty reduction is to reduce global poverty (incidence) below 3% by 2030. Why do we decide that way? It is because below 3% we call statistical measurement error, so it is actually very difficult to achieve this. Then according to the World Bank's poverty standard, which is about $1.90 a day of equivalent purchasing power (the 2011 price standard), there are still 678 million people living in poverty worldwide. China's [poor population] is basically close to zero, and we are already below 3%.
But what are we seeing this year? After the new crown virus, as the incomes of countries around the world have decreased, poverty has increased significantly. According to the projections of the World Bank and the International Monetary Fund, we calculated that if the curve of social distribution does not change, the number of people living in poverty in the world due to the impact of the new crown virus may reach 60 million to 100 million. Why do we give such a large range? That's because if the global average income is reduced by 5 percent, and if everyone in different positions on the income distribution curve is also reduced by 5 percent, then the global poverty population will increase by 80 million.
Then we also see that in many countries like the United States, low-income people are affected by the virus, and the impact of the epidemic is even greater. That is to say, the vulnerability of low-income groups makes them even poorer in this case, so if you consider that the income distribution curve will worsen, it is likely to be higher than this 80 million, to 100 million.
In the worst case, if the income is reduced by 20%, what would it be like? There will be 420 million new people living in poverty worldwide, which is a huge amount. At $1.90 a day, there were nearly 670 million and 680 million people living in poverty in 2018. Well, imagine 420 million that's a big number. This also shows that the poor are very vulnerable. The possibility of returning to poverty is always there, and that is the second issue I would like to address.
Then, under the current standards, after we have fully lifted ourselves out of poverty this year, the new challenge we face after 2020 is that we may go from measuring absolute poverty to relative poverty, or further raising the absolute poverty standard. I have a few graphs here, and you can see that as the average level of national income increases, the poverty line set by the state is getting higher and higher, which is a trend that we can see all over the world.
The second table shows how China compares to other middle-income countries, such as Brazil, Thailand, and so on. We can see that our current poverty line standard is still relatively low. That is to say, if our poverty line is compared with the same level of economic development as that of these countries, it is quite low. If we raise the poverty line, the work we face in poverty alleviation will be even more arduous. That's a point.
Second, if we look at relative poverty, we must look not only at each person's own income, but also at the gap between the income of society as a whole. Then this one gives us a greater challenge. Because if we want to set the relative poverty line, according to China's current level of development, according to our analysis of the international poverty line of more than 140 countries around the world, China's relative poverty line may be 2 to 3 times higher than the existing poverty standard.
From measuring absolute poverty to measuring relative poverty, another important factor is the degree of inequality in income distribution, and the impact on relative poverty is very large. As for how we set this relative poverty standard, due to the relationship of time, I will not go into detail here, but we must remember two points, one is that our entire economic growth should be inclusive, that is, vulnerable groups and low-income groups can benefit from growth. The second is our policy support, which should focus on vulnerable groups and low-income groups. For example, in many countries, higher education institutions have correspondingly lower standards for poor areas, that is, for vulnerable groups. Why? For example, the educational resources in Beijing and Shanghai are better than those in Qinghai, Gansu and Guizhou. Therefore, we give appropriate preferential treatment to students in these poor and remote areas. Then this is a kind of policy tilt towards poor areas and to vulnerable groups. This is what we will further consider from the policy point of view in the future.
Another problem is the issue of vulnerability, and what we can see from all countries in the world is that under the influence of the epidemic and the impact of special disasters, vulnerable groups are the most vulnerable. How is vulnerability measured? Now some economists have also invented some methods, and recently we have worked with Bill Gates' Beijing office, the China Center for International Poverty Alleviation, the Free University of Amsterdam and other units to conduct research on the vulnerability of China's poor, and the key here is data. Then I would like to take this opportunity to propose that all departments in China should work together more cooperatively and open up data so that our poverty alleviation work can be carried out better, more effectively and at a lower cost.
Finally, I would like to talk about how to use new technologies such as big data, machine learning, and artificial intelligence to improve the efficiency of our poverty alleviation monitoring and evaluation.
You all know that in the past few years, in order to achieve the goal of comprehensive poverty alleviation under the current standards in 2020, millions of village-based cadres have gone down to the grass-roots level, and some have even sacrificed their lives. Then we have spent a lot of manpower and material resources in these years, and one of the (jobs) is how to identify and detect poverty.
One of the suggestions I would like to make here is that we can use existing data, especially big data and new technologies, to detect and evaluate poverty alleviation. For example, data such as the recent census we just conducted and the economic census, agricultural census, electricity consumption, mobile phone traffic, etc. that we just conducted last year can be used to monitor poverty and simulate policy formulation.
Thank you.